Good advice never goes astray, and can help SMEs in dire situations. Establishing an advisory board is one way of getting the top minds together to get the best advice for your business.
While the word ‘board’ may paint a picture of directors in suits and ties in a sprawling office, an advisory board can provide key advice for a business of any size to make the best decisions.
But how do you make sure you are getting the best of the best for your business?
5 steps to creating your own advisory board
1. Believe in your business
Before you even think about having an advisory board, Ms Hammond said that being committed to your business is vital.
“You need to be building a business that you genuinely believe in,” she says.
“Don’t hedge your bets with side plans of other potential business ideas. An adviser wants to see that you’re committed to your business – otherwise why should they be?
“Advisers want to be involved with entrepreneurs that are 100 per cent focused on their venture.”
2. Experience is everything
Try taking a chance and “don’t be afraid to reach out” to industry veterans and leading influencers, but keep in mind that they will not want to work for free, says Ms Hammond.
“Many may only engage with you if their involvement remains private and, being very busy, they will only be involved if they genuinely like you and your business,” she says.
“Be respectful of their time and demonstrate a willingness to take their advice on board.”
She adds: “Find people with skills and expertise in areas where you are lacking. This will give help fill any knowledge gaps and give you a well-rounded foundation of expertise.”
3. Size doesn’t always matter
With advisory boards, quality always trumps quantity in the beginning.
“It is completely fine to initially work with just one or two advisers,” Ms Hammond says.
When starting an advisory board, engaging your advisers for a trial period works best.
“As you grow and your business requirements change, you can add more board members,” she says.
It is important to consider that you always get what you pay for, and this applies to advisory board members too.
“The adage ‘If you pay peanuts, you get monkeys’ applies to your advisory board – you cannot expect top-level advice to come cheaply,” says Ms Hammond.
“Set a budget for your advisory board and go about finding the very best talent you can afford.
She adds: “Also, don’t be afraid to part ways if an advisory board member is not adding value.”
4. Broad knowledge is better
Ms Hammond suggests looking for board members with board experience, or who are successful entrepreneurs in a similar field to your business, as opposed to specialists like accountants or lawyers.
“They will have useful insights into how to grow your business, review your strategy and avoid mistakes that are critical to your success, as they’ve been there before,” she says.
5. Meet monthly
Holding an advisory board meeting every month is recommended, but Ms Hammond also suggests having one-on-one meetings with board members to help solve specific issues.
“When it comes to how formal or structured your meetings are, there are no set rules, so find what fits best for you and your board,” she says.
“Be prepared for your advisers to say things you may not want to hear.
“Remember, the collective wisdom of the board is usually given with the best interests of the business at heart.
“The important thing is to ensure you keep having regular meetings, to build successful relationships with your board and also to stay focused on the business’ performance.”
Look for experience, not personal connection
While it may be easier to recruit family and friends to be a part of an advisory board, Melissa Browne, founder and CEO of Accounting & Taxation Advantage (A+TA), does not recommend including the people you are close with in business decisions.
“I've seen everything from trades to personal services to the creative industries ... both for friends and unrelated parties that go into business together, there is the potential and I have seen issues,” she says.
“One example that I'm thinking of was friends that went into business together, and one of them actually became unwell.
“The other one wanted to support the one that was unwell, which of course they would. But then they ended up resenting the fact that they couldn't put in the same effort, and so then one wanted to buy them out, and the person that was sick didn't want to go, and it really fractured the friendship and it became quite toxic, and the business definitely suffered as a result.”
Example: Beyond Travel
“I immediately appointed a board, which is an advisory board, a non-executive board, and I made sure that they are the best at what they [do],” he says.
“That was the first thing that I did – I needed help, I just needed them to give me advice and directions and whatever their expertise is.
“I suppose just acknowledging that I have limitations and I need help was the first thing I made sure to happen, and from that, we formed the goal, the vision, the values and so on, and then I [could] get on with the whole organisation to form all that.
“With that then allowed innovation, and on top of that, because I knew we needed to bump up our sales department.”
Michael believes that establishing an advisory board is not an intimidating process, and fully supports it.
“They are just gold – whatever they tell me, there is just so much wisdom combined, and because [there are] two of them they balance each other,” he says.
“To the staff, I think it really encouraged them to see me growing and to see that there are people out there who are very wise at what they do helping us grow. I think if anything, you encourage everybody in the company.”
Indeed, far from simply being an external source of advice on an ad hoc basis, Michael suggests that Beyond Travel’s success is in part due to his advisory board.
“I would not have the capacity – or not capacity, but the know-how – to get me to break from a small business into a large corporation,” he says.